Heating costs to rise this winter

Thursday

Oct 11, 2012 at 2:30 PM

Associated Press

Americans will pay more to heat their homes this winter as they feel something they didn’t feel much of last year: cold.

Prices for natural gas, heating oil and other fuels will be relatively stable. But customers will have to use more energy to keep warm than they did a year ago, according to the annual Winter Fuels Outlook from the Energy Department’s Energy Information Administration.

Last winter was the warmest on record. This year temperatures are expected to be close to normal.

Heating oil customers are expected to pay an average of $3.80 per gallon, the highest price ever. That will result in record heating bills, at an average of $2,494. That’s nearly $200 more than the previous high, set in the winter of 2010-2011.

“It’s two different worlds. For most families this is still going to be an affordable year, except for those who use oil heat,” says Mark Wolfe, the Executive Director of the National Energy Assistance Director’s Association. “For them, it’s going to be very difficult.”

Natural gas, propane and electricity prices are relatively low because of a dramatic increase in domestic natural gas production over the last five years. Natural gas is used to generate about one-third of the nation’s electricity and is instrumental in setting the price of electricity. Recently drillers have been increasing production of so-called natural gas liquids, including propane.

Heating oil will hit record prices because it is made from crude oil. Crude is priced globally, and has stayed high because of increasing world demand, worries about supply disruptions in the Middle East, and stimulus programs from central banks around the world that encourage investment in oil and other commodities. Oil has averaged $95.95 per barrel in the U.S. so far this year, up from an average of $94.86 in 2011.

Consumers already have an issue with oil: high gasoline prices. Nationally, drivers are paying an average of $3.813 per gallon, up 42 cents from a year ago, according to the Energy Department. This morning, www.gasbuddy.com reported that those who purchase gasoline in Sault Ste. Marie were paying an average of $4.03 per gallon.

But most of the increase in winter heating costs will be due to cooler weather this winter. East of the Rockies, the weather is expected to be about 2 percent warmer than normal but 20 percent to 27 percent colder than last year. In the West, temperatures were closer to normal last year, so the expected decline for this winter is just 1 percent.